Lower sales cause GM to slash jobs in Japan

TOKYO - General Motors will cut as many as half of the 260 employees at its operations in Japan by the end of October to reduce costs amid a long slide of its business here.

The job cuts at GM Japan, which imports GM vehicles, and GM Asia Pacific (Japan), which oversees GM's business in Japan, is a response to falling Japanese demand for GM products. GM sales here totaled 24,094 in 2002, including sales of the Chevrolet Cruze built in Japan by Suzuki Motor Corp. That was down 7.4 percent from 2001, and off from a peak of 49,971 in 1996.

Sales fell another 50.4 percent in the first five months of 2003, to 6,352.

In 1995, the dollar dropped to a record-low ¥79, allowing many foreign carmakers to cut prices in Japan and post strong import sales here in 1995 and 1996. But after the dollar rebounded above ¥100 by 1997, importers' hopes for huge sales in Japan were dashed.

"Any decision that affects employment levels is taken very seriously, and in the end we made our decisions based on what it would take to not only survive but also thrive in the Japanese market," Raymond Grigg, GM Japan's CEO, said in a statement.

GM is enlisting its Japanese alliance partners to save costs, reduce its own head count in Japan, and still boost its sales there.

This fall, GM will transfer the right to import and distribute Chevrolets in Japan to Suzuki Motor Corp. On Saturday, June 14, Fuji Heavy Industries Ltd., maker of Subaru, will start selling Saabs. GM owns 20 percent of both Suzuki and Fuji Heavy, and has encouraged Fuji Heavy and Saab to cooperate on product development as well.

GM has faced repeated setbacks in Japan, where it sells models under the Opel, Cadillac, Chevrolet and Saab brands.

In 1996, GM started selling the U.S.-built Chevrolet Cavalier in Japan through Toyota Motor Corp. outlets. Toyota originally said it would sell 100,000 Toyota Cavaliers over five years, in what was seen widely as an effort by Toyota to reduce trade friction with Washington. But Toyota never came close to reaching its annual sales target of 20,000. Four years later, lackluster sales of the model forced GM to abandon the project.

GM also brought the Saturn to Japanese showrooms with great fanfare in 1997 but pulled the plug in 2001.